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KCI Auto Auction, Inc. v. Anderson

United States District Court, W.D. Missouri, St. Joseph Division

February 1, 2018

KCI AUTO AUCTION, INC., Plaintiff,
v.
ALONZO ANDERSON, et al., Defendants.

          ORDER

          NANETTE K. LAUGHREY UNITED STATES DISTRICT JUDGE.

         Pending before the Court is Plaintiff's Motion for Default Judgment, Doc. 48, Plaintiff's renewed Motion for Default Judgment, Doc. 80, Defendant Anderson's Motion to Dismiss, Doc. 82, and Plaintiff's Motion to Strike Defendant Anderson's Answer to Amended Complaint and Motion to Dismiss, Doc. 83. For the following reasons, the motions are denied.

         I. Background[1]

         Plaintiff KCI Auto Auction, Inc. is a wholesale motor vehicle auction located in Kansas City, Missouri. KCI sells over 500 automobiles, to licensed used car dealers and/or their salespersons, at its auctions each week. The individual defendants, Alonzo Anderson, Danny Ephrem, David Ephrem, Jason Ephrem, J.J. Ephrem, Tom Ephrem, Angelo Jefferson, and Barry Ristick, operate a used car business in Wichita, Kansas, and regularly participated at KCI's auctions between 2014 and 2017. The defendants participated at the auctions purportedly on behalf of defendants Lucky 7 Used Cars, L.L.C., Lucky 7 Discount Auto Sales, LLC, and Quality Used Cars LLC. However, KCI alleges that the name Lucky 7 Used Cars, LLC, as well as other variations that the defendants sometimes used, is not recognized as any type of legal entity in any state. Therefore, KCI brings its claims against the defendants as partners who operated together under fictitious names. Doc. 41, pp. 6-14.

         KCI granted the Defendants permission to participate at its auctions in April 2014. In June 2014, Defendants Barry Ristick and Tom Ephrem, acting on behalf of Lucky 7 Used Cars, LLC, entered into a “floor plan” agreement with KCI. Under the agreement, KCI allowed the Defendants to make vehicle purchases at the auctions without full payment. The Defendants were to pay the full amount due within sixty days, however, and agreed that KCI would retain the original title until it received payment. The Defendants also agreed not to sell or transfer the vehicles to any other party until making full payment to KCI and receiving the title.

         KCI subsequently created a floor plan account under the name Lucky 7 Used Car Sales LLC. Over the course of three years, the Defendants purchased 293 used vehicles from KCI, with the sales price and buyer fees totaling about $1.2 million. Per the agreement, the vehicles were purchased by the Defendants under the Lucky 7 Used Car Sales LLC name. As such, the sales contracts were entered into in the name of Lucky 7 Used Car Sales LLC, and every certificate of title that was transferred to Defendants listed the buyer's name as Lucky 7 Used Car Sales LLC.

         The Lucky 7 account became delinquent with KCI beginning in 2015. In February 2017, the Lucky 7 Used Car Sales LLC dealership license was revoked by the state of Kansas for violating numerous provisions of the Kansas vehicle dealer laws. In March 2017, Defendant Jefferson filed Articles of Organization for Defendant Quality Used Cars, LLC, and applied for and received another used car dealership license from the state of Kansas. The Defendants then continued to conduct their used vehicle operation under the new name. KCI brought suit in July 2017, alleging:

• Count I: Breach of Contract
• Count II: Action on Account
• Count III: Promissory Estoppel
• Count IV: Account Stated
• Count V: Fraudulent Misrepresentation
• Count VI: Fraudulent Conveyance
• Count VII: Unjust Enrichment and Quantum Meruit
• Count VIII: Conversion
• Count IX: Replevin
• Count X: Civil ...

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